UK Moves Forward with EU Securities Reform, Reports Reuters

LONDON (Reuters) – On Friday, Britain’s financial watchdog released a consultation paper aimed at implementing reforms related to the European Union’s securities markets. This move sends a clear message to banks: the recent decision by British voters to leave the EU should not obstruct progress on upcoming regulatory changes.

The MiFID II reform from the EU aims to significantly alter securities markets by enhancing controls over commodities, increasing trading transparency, and addressing the fast-paced dynamics of high-frequency trading.

These regulations are set to take effect in January 2018, just a year ahead of the timeline some UK government ministers envision for completing Brexit negotiations.

Andrew Bailey, Chief Executive of the Financial Conduct Authority, noted that MiFID II resonates with the principles of UK conduct regulation and implements international commitments endorsed by Britain, implying that these rules will persist even post-Brexit.

"In our statement following the EU referendum, we emphasized that firms must continue to meet their obligations under UK law, including those stemming from EU legislation, while advancing their implementation plans for forthcoming laws," Bailey stated.

He previously indicated that the UK would not experience a "bonfire of regulations" after leaving the EU.

The new European securities law will also allow non-EU countries to provide services to European customers, provided they can demonstrate that their regulatory frameworks are comparable to those of the EU.

Legal experts have pointed out that this could enable the UK to exit the EU’s single market while allowing its financial services sector to maintain operations within the bloc through the equivalence mechanism.

However, critics argue that the equivalence system is yet to be tested, vulnerable to political influence, and difficult to uphold if the EU decides to modify its regulations in ways that the UK may not support.